The passage of the 2018 Farm Bill capped off a momentous year for cannabidiol, or CBD, a non-psychoactive derivative of cannabis. As we wrote about here, the year kicked off with the rescission of the Cole Memo, the DOJ’s policy statement regarding enforcement in states where cannabis is legal. The feared enforcement uptick never materialized, though. By mid-year, FDA approved Epidiolex, a prescription drug made from CBD isolate for treatment of rare forms of epilepsy. Later in the year, Sen. Majority Leader McConnell (R-KY) saw opportunity with the Farm Bill update to expand industrial hemp legalization at the federal level. Following conference committee work to iron out differences, the House and Senate passed the final version in mid-December and the President signed it on December 20.

As companies consider the business opportunity, it’s important to separate the myths regarding what the Farm Bill did from the realities.

Myth #1: CBD Is Fully Legal Since It’s Not A Controlled Substance Anymore.

It’s more complicated than that. Regulation exists at the federal and state levels. At the federal level, the 2018 Farm Bill de-schedules industrial hemp and various derivatives thereof, including CBD, from the Controlled Substances Act when produced in compliance with a state hemp program. Industrial hemp is defined as cannabis (Cannabis sativa L.), and derivatives of cannabis with extremely low (less than 0.3 percent on a dry weight basis) concentrations of the psychoactive compound delta-9-tetrahydrocannabinol (THC). This means that the DEA no longer has jurisdiction over CBD from industrial hemp because it is no longer illegal under federal law. DEA retains jurisdiction over CBD from marijuana because it remains a Schedule I substance. The DEA isn’t the only relevant regulator, though. The FDA and the states also have jurisdiction. Read on.

Myth #2: FDA Has Approved CBD So The Claims I’m Seeing Online Must Be Substantiated.

FDA has only approved Epidiolex for treatment of rare forms of epilepsy. This approval does not mean that other CBD claims are approved or that FDA agrees that CBD can be lawfully used in other products.

FDA’s position is that CBD from any source is an active drug ingredient. FDA has voiced this position in warning letters and reiterated it just last week. The agency also highlighted its continuing concern about consumer safety and disease treatment claims featured on unapproved CBD products. Finally, FDA acknowledged the public’s growing interest in CBD’s potential therapeutic capabilities and expressed a commitment to consider whether there are circumstances in which certain cannabis-derived compounds might be permitted in a food or dietary supplement. Although not specific to CBD, FDA announced that three hemp ingredients – hulled hemp seeds, hemp seed protein and hemp seed oil – may be legally marketed in foods under the conditions set forth in their respective GRAS notices.

Myth #3: The 2018 Farm Bill Preempts All State Laws.

On the issue of preemption, Section 10113 of the 2018 Farm Bill expressly does not preempt laws that are more stringent than those found in the Bill regarding the production of hemp. See Sec. 297B(a)(3)(A) (“No Preemption. – Nothing in this subsection preempts or limits any law of a State or Indian tribe that (i) regulates the production of hemp; and (ii) is more stringent than this subtitle.”).

However, Section 10114(b) of the 2018 Farm Bill does provide: “No State or Indian Tribe shall prohibit the transportation of shipment of hemp or hemp products produced in accordance with . . . Section 10113[] through the State or the territory of the Indian Tribe, as applicable.” Section 10114(b) thereby clearly preempts any state law prohibiting shipment of industrial hemp through a State or territory of an Indian Tribe.

It also arguably preempts any State law prohibiting the sale of industrial hemp in a State or territory of an Indian Tribe, so long as the hemp was produced (in another state) pursuant to the requirements of Section 10113. Unfortunately, it is not clear whether Section 10114(b) of the Farm Bill preempts State laws disallowing sales of industrial hemp. It will likely take litigation to decide the extent of the preemption, if any, regarding sale of industrial hemp in States which have laws disallowing such sales. The National Conference of State Legislatures maintains a helpful chart of states that have established such programs here.

In addition, there is a patchwork of state-level product considerations. For example, California expressly follows FDA’s position that CBD cannot be lawfully be used in foods or dietary supplements. By contrast, New York expressly allows CBD in dietary supplements when the products meet other program requirements. Companies should consider these types of regulations on a state-by-state and product-by-product basis.

Myth #4: Since CBD is Legal, There Is No Risk in Selling It

While the 2018 Farm Bill provided needed clarity as to the status of industrial hemp at the federal legal, this remains murky territory. There has been localized enforcement in many states, frequently involving confusion about the product. Companies seeking to sell CBD should consider their specific products in conjunction with the other federal and state considerations discussed above.

The year ahead will bring more changes. Companies should be sure to stay informed to properly evaluate the risks and opportunities.

The DEA announced last week that it is placing certain drug products that have been approved by the FDA and which contain cannabidiol (CBD) in schedule V of the Controlled Substances Act. The action places FDA-approved drugs that contain CBD derived from cannabis and no more than 0.1 percent tetrahydrocannabinols in Schedule V.

Schedule V drugs are those considered to have lower potential for abuse than drugs in Schedules I – IV. For reference, cannabis and heroin are Schedule I, cocaine and Ritalin are Schedule II, Tylenol with codeine is Schedule III, and Xanax and Ambien are Schedule IV.

Importantly, this does not render all CBD in the Schedule V category. DEA expressly limited the classification to FDA-approved drugs, which currently consists of just one product – Epidiolex. Cannabis remains a Schedule I substance and cannabis-based CBD generally remains scheduled as a derivative of cannabis.

DEA’s move provides certainty for drug makers seeking to introduce a CBD drug similar to Epidiolex, but would not apply to products with greater than .1 percent tetrahydrocannabinols.

FDA recently released a new draft guidance, “Innovative Approaches for Nonprescription Drug Products,” that described two “innovative approaches” that sponsors of new drug applications may wish to consider to demonstrate the safety and effectiveness of nonprescription drugs. In announcing the draft guidance, FDA Commissioner Scott Gottlieb explained that the agency sees an opportunity to “foster greater access to the medicines that help keep people healthy” by encouraging “innovative tools, like digital health technologies, that would support consumers in appropriately and safely self-selecting and using certain drugs.”

While reiterating that the legal standard for approval of new drugs as nonprescription drug products remains the same under section 505 of the Federal Food, Drug & Cosmetic Act, the draft guidance identifies two specific innovative approaches that “could lead to the approval of a wider range of nonprescription drug products, including drug products that may treat chronic conditions or other conditions for which the limitations of the DFL [drug facts labeling] present challenges for adequate communication of information needed for safe and effective use without the supervision of a health care practitioner.” Those two approaches are:

Labeling in Addition to the DFL for Nonprescription Drug Products. The draft guidance explains that FDA may approve additional labeling for nonprescription drug products and cites as potential examples information leaflets, text or images on a video display or interactive displays, information displayed on websites, and statements or questions on a mobile application.

Nonprescription Drug Products With Additional Conditions for Safe and Effective Use. The draft guidance suggests that new drug sponsors may wish to propose additional conditions that consumers must fulfill to ensure that the product is safe and effective for nonprescription use, such as requiring the consumer to respond to a set of questions on a mobile application or affirm that they’ve seen a video describing how to appropriately use the drug. The draft guidance further notes that “applicants should consider how to ensure proper implementation of any additional condition necessary for safe and effective use.”

Comments on the draft guidance will be accepted until September 17, 2018. Commissioner Gottlieb noted that the agency views the draft guidance as “a first step as drug developers begin to study products that might be considered for marketing without a prescription.” As noted in Commissioner Gottlieb’s statement accompanying the draft guidance, the agency also intends to initiate a rulemaking that will “clarify the requirements for a drug product that could be marketed as a nonprescription drug product with a requirement that ensures appropriate self-selection by consumers, appropriate actual use, or both.”

In a remarkable and perhaps precedent-setting decision, a California appellate court sided with cereal manufacturers in ruling last week that Proposition 65 cancer warnings for acrylamide were preempted by federal policy encouraging the consumption of more whole grains. In overturning a lower court ruling finding no preemption, the three-judge panel of the state appeals court gave remarkable deference to Food and Drug Administration policy and guidance which, the court stated, “contained persuasive reasoning why Proposition 65 acrylamide warnings on whole grain cereals would mislead consumers and lead to health detriments.” The appellate panel found that the lower court erred in failing to give “weight to the FDA’s analysis and concerns regarding a Proposition 65 warning and the obstacles it would pose to the fulfillment of its statutorily-driven dietary goals.” FDA also has expressed concerns that Prop 65 warnings should be deferred given the uncertainties about the actual risks to human health from acrylamide in food.

Acrylamide — the chemical at issue in the recent Prop 65 coffee imbroglio — is not naturally present in food products but is created by the Maillard reaction, which occurs naturally between amino acids and sugars at high temperatures. A wide variety of food products, including most prominently baked and fried starches, contain acrylamide at relatively low levels, but nevertheless in amounts that may require a Prop 65 warning. Continue Reading

Earlier this month, the Food and Drug Branch of the California Department of Public Health (CDPH) updated an FAQ document relative to regulation of cannabidiol (CBD), a non-psychoactive derivative of cannabis, which has been in the news most recently relative to FDA’s approval of a CBD drug to treat rare forms of epilepsy. CBD is also widely sold in many states, labeled as a food or dietary supplement.

In the FAQ document, CDPH recited the definition of “food” as

(a) Any article used or intended for use for food, drink, confection, condiment, or chewing gum by man or other animal.

(b) Any article used or intended for use as a component of any article designated in subdivision (a). [citation omitted]

The CDPH points out that the definition of “food” does not include products containing cannabis, which is legal in California and regulated by the CDPH Manufactured Cannabis Safety Branch. Further, CDPH appears to discard the position held by many in the CBD industry that the 2014 Farm Bill, which legalized growing of industrial hemp by state departments of agriculture or institutions of higher education for research purposes, supports broader legalization of CBD derived from industrial hemp. Continue Reading

On June 20, 2018, the FDA released draft guidance regarding the FDA’s Mitigation Strategies to Protect Food Against Intentional Adulteration Rule (IA Rule). This is the first of three installments of guidance the FDA plans to release related to the IA Rule.

The new guidance covers the development of a food defense plan, which includes the following:

Vulnerability assessment: an assessment that identifies vulnerabilities in a facility’s food manufacturing processes and provides actionable process steps, which are places in the process where a facility can implement mitigation strategies to minimize or prevent the vulnerability;

Food defense monitoring procedures: procedures, including the frequency with which they are to be performed, for monitoring mitigation strategies to assess whether mitigation strategies are operating as intended;

Food defense corrective action procedures: actions taken if the mitigation strategies are improperly implemented based on the nature of the actionable process step and the mitigation strategy; and

Food defense verification procedures: verification activities to ensure that monitoring is being conducted and appropriate decisions about corrective actions are being made.

Making good on this April 20th announcement, Senator Chuck Schumer (D-NY) introduced legislation that would upend current federal regulation of marijuana. Specifically, the Marijuana Freedom and Opportunity Act removes marijuana from the list of scheduled substances under the Controlled Substances Act, effectively decriminalizing it at the federal level. Under the bill, states would continue to have individual authority to regulate marijuana but federal authorities would be able to prevent trafficking between states where the substance is legal to where it is not and to oversee advertising to the extent necessary to prevent targeting ads to children. Co-sponsors include Senators Bernie Sanders (I-VT), Tim Kaine (D-VA) and Tammy Duckworth (D-IL).

Highlights of the proposed legislation, per the Fact Sheet, include the following:

Decriminalize Marijuana: The legislation would decriminalize marijuana at the federal level by descheduling it, which means removing marijuana from the list of scheduled substances under the U.S. Controlled Substances Act of 1970;

Respect States’ Rights: The legislation would maintain federal law enforcement’s authority to prevent marijuana trafficking from states that have legalized marijuana to those that have not;

Level The Economic Playing Field: The legislation would establish dedicated funding streams to be administered by the Small Business Administration (SBA) for women and minority-owned marijuana businesses that would be determinant on a reasonable estimate of the total amount of revenue generated by the marijuana industry;

Ensure Public Safety: The legislation would authorize $250 million over five years for targeted investments in highway safety research to ensure federal agencies have the resources they need to assess the pitfalls of driving under the influence of THC and develop technology to reliably measure impairment;

Invest In Public Health: The legislation would invest $500 million across five years for the Secretary of Health and Human Services to work in close coordination with the Director of National Institutes of Health (NIH) and the Commissioner of Food and Drug Administration (FDA) in order to better understand the impact of marijuana, including the effects of THC on the human brain and the efficacy of marijuana as a treatment for specific ailments;

Protect Children: The legislation would maintain the Department of Treasury’s authority to regulate marijuana advertising in the same way it does tobacco advertising to ensure the marijuana businesses aren’t allowed to target children in their advertisements. The bill also allows the agency to impose penalties in the case of violations;

Incentive sealing and Expungement programs: The legislation authorizes grant programs to encourage state and local governments to administer, adopt, or enhance expungement or sealing programs for marijuana possession convictions. The bill provides $100 million over five years to the DOJ to carry out this purpose.

The FDA recently announced that it will hold a public meeting entitled, “Foods Produced Using Animal Cell Culture Technology,” on July 12, 2018 to provide the public with an opportunity to offer feedback related to the production of foods using animal cell culture technology. Stakeholders will also have the opportunity to submit written comments until September 25, 2018.

The agency indicated that it intends to “share our initial thinking for how we intend to appropriately apply our existing regulatory tools and policies to this novel area of technology.” The agency specifically asked for input, relevant data, and information related to certain questions, such as:

The kinds of variations in manufacturing methods that would be relevant to the safety of such products when consumed as foods;

The kinds of substances used in the manufacture of foods produced using animal cell culture technology;

Potential hazards associated with the production of such foods and the need for unique control measures to address potential hazards.

While this meeting will be focused on food safety issues, the notice noted that the agency “recognizes the importance of other issues . . . , such as labeling, and FDA welcomes comment on these other issues and expects that they will be the focus of future engagement with stakeholders and the public.” Interested parties can register for the meeting here or submit comments on the docket here.

Earlier this week, U.S. Senators Cory Gardner (R-Colo.) and Elizabeth Warren (D-Mass.) and U.S. Representatives David Joyce (R-Ohio) and Earl Blumenauer (D-Ore.) introduced the bicameral, bipartisan Strengthening the Tenth Amendment Through Entrusting States Act (STATES Act). The purpose of the proposed Act is to protect the rights of individual states, the District of Columbia, U.S. territories, and federally-recognized tribes to regulate marijuana within their respective borders.

The introduction of this bill follows the rescission of a DOJ policy known as the Cole Memo, which was Obama-era guidance to federal prosecutors regarding marijuana enforcement. As we wrote here, rescission of the Cole Memo was characterized as an effort to restore prosecutorial discretion, albeit one that was made while also casting marijuana as a contributor to “the growing drug crisis.” Attorney General Sessions has been vocal in his opposition to marijuana legalization and the change in policy prompted concern by many that the burgeoning industry would be targeted.

In response to potential new enforcement, Colorado Senator Cory Gardner announced that he would block all DOJ nominations. Colorado made recreational marijuana legal in 2014 by voter referendum, the same mechanism used in several other states where marijuana is legal.

Contrary to his attorney general’s support for federal marijuana enforcement, President Trump has reportedly given assurances to Senator Gardner that Colorado’s cannabis industry would not be impacted by the rescission of the Cole Memo. Most recently, as reported by Politico, President Trump expressed support for the STATES Act and indicated that he expects that he will sign it.

What’s Likely To Happen. Like any piece of legislation, the bill will undergo debate and markup and may look very different when and if it is eventually brought up for a vote. Also, the President does have a documented history of expressing support for a position and changing his mind the following week. Notwithstanding, marijuana legalization remains popular with voters and leaving the issue to the states would be consistent with the President’s support for states’ rights generally.

For industry, it seems increasingly possible that the rescission of the Cole Memo was a unifying catalyst rather than a threat. Stay tuned here for updates on the STATES Act and our upcoming post on the real impact of the rescission of the Cole Memo.

Both the USDA and the FDA recently released updates to food labeling regulations that will significantly affect food manufacturers. On Friday, May 4, the Agricultural Marketing Service (AMS) of the USDA proposed a rule regarding the National Bioengineered Food Disclosure Standard providing labeling requirements for disclosing whether a food product has been bioengineered.

The proposed rule applies to specific food products: (1) those foods that meet the definition of “food” under the federal Food, Drug, and Cosmetic Act (FDCA); and (2) foods that are subject to Federal Meat Inspection Act, Poultry Products Inspection Act, or the Egg Products Inspection Act, if those foods’ most predominant ingredients would be subject to the FDCA requirements, or its most predominant ingredient is a broth, stock, water, or something similar, and the second-most predominant ingredient is subject to the FDCA. An example would be a chicken pasta soup where chicken broth is the most predominant ingredient, and pasta is the second-most predominant ingredient.

AMS has identified specific products that would be subject to the rule, based on their presence in the United States market. Foods such as field corn and soybeans that are known to be largely bioengineered and have been highly adopted in the United States. will require a bioengineered disclosure, as will products made from those foods, such as corn meal and soy sauce. Other foods, such as sweet corn and summer squash, are not as highly prevalent in bioengineered forms in the United States and thus have different labeling requirements. However they still require some type of bioengineered disclosure.

Under the proposed rule, disclosure requirements would not be triggered by the use of incidental additives that are made from bioengineered organisms, or food derived from animals that consumed bioengineered feed. In addition, the proposed disclosure requirements would not apply to food that the USDA has certified as organic.

AMS has proposed a variety of options in terms of how the products can be labeled, and has provided a few different design options as well. Some examples are below:

These labeling requirements are proposed to go into effect on the same dates as the updated FDA labeling rules. For more information about the proposed rule, see our client advisory here.

Comments on this proposal will be accepted until July 3, 2018. AMS does not intend to extend the comment period beyond this date. AMS must provide a final rule by July 29, 2018.

On the same day, the FDA provided a final rule extending the date for required compliance for the final rules for the Nutrition Facts Label and Serving Size Label. Manufacturers that have more than $10 million in annual food sales have an extension from July 26, 2018 to January 1, 2020, and manufacturers with less than $10 million in annual food sales have an extension from July 26, 2019 to January 1, 2021.

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ABOUT THE FOOD AND DRUG LAW PRACTICE

Kelley Drye’s food and drug team is experienced in the full spectrum of regulatory and legal risk management issues that food and drug companies must navigate to comply with Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA) and Federal Trade Commission (FTC) requirements, and be successful in the U.S. marketplace. We represent companies throughout product development and marketing, including all premarket clearance requirements for product safety, labeling, advertising and other marketing promotions. We also represent companies in food and drug law matters concerning product manufacturing, distribution, supply chain management and import/export requirements. In addition, our food and drug team represents companies in matters concerning defective products in the U.S. marketplace, including postmarket adverse event reporting obligations, recalls, investigations, warning letters and adverse publicity. We defend companies when the safety, labeling or marketing of their products is challenged in cases brought by the government, competitors, or on behalf of consumers.